In Cyprus, Luxembourg and Ireland, 12 Greek companies have taken refuge to join their employees in one of the many multi-employer professional foundations that operate in the rest of Europe but not in our country. At the same time, large listed companies that had charters ready for the operation of the Professional Insurance Fund in our country backed down due to reports of interference with the tax regime that currently governs the second tier of insurance.

The Department of Labor has long been announcing an institutional intervention in the Occupational Insurance Funds (TEA), which turns 20 this year. The aim of the Ministry, through a draft law that is in the final stages of development and expected to be the next legislative intervention (the draft law on “Social Housing” was already tabled on Friday), is to create a more modern and functional institutional and supervisory structure in order to the industry could develop in a healthy way through adequate and fair incentives for all policyholders while strengthening their protection. In anticipation of these interventions, of course, there were already many Greek companies that decided to include their employees under the umbrella of a multi-employer occupational insurance fund operating in another European country.

So, according to the secret information of “K”, 8 companies applied to the Cyprus market, 2 – to Ireland and 2 more – to Luxembourg. In fact, since the legislation on cross-border cooperation provides for suffocating time limits, there is the following paradox: it takes even 12 months to approve the statute of a simple professional insurance fund in Greece, when permission to apply to a Greek company abroad is given in 4 months.

As Christos Nunis, President of the Hellenic Union of Professional Insurance Funds and head of the TEA Economists, points out, in an interview with K, the creation of a TEA with several employers, i.e. connections, do not belong to the same professional group, do not engage in the same profession and do not work in the same company, in a country like Greece, where small and medium-sized enterprises predominate and there are a large number of self-employed people, should be a top priority.

And this is because it is a market in which 88.5% of enterprises employ less than 10 people and 99% less than 50 people, while the legislative framework in force since 2002 sets a minimum number limit of 100 people as a condition for creating a TEA. Thus, in practice, there is no place for the creation of professional funds for more than 2000 enterprises, which can be solved by the institutionalization of so-called professional funds with the participation of several employers.

While domestic companies as well as worker sectors are already actively moving towards the creation of new occupational insurance funds (OIFs), there are 5 new funds being created that are ready to be added to the 30 already existing (26 OIFs and 4 compulsory insurance funds). ), there is another issue that is expected to be a thorn in the draft law: the TEA taxation regime with a hint on whether one-time benefits will eventually be taxed (today, as in the social security system, they are not taxed) . This is arguably the biggest stake of the upcoming reform, with Fund officials pointing out – even in the leadership of the Ministry of Labor – that TEAs do not enjoy any special tax regime, as it is erroneously claimed. On the contrary, they contend, the tax regime is identical to that of lump-sum social security contributions. The reason for the identification is that they are both types of funds, they are established by law and therefore link employers and employees, and they believe that there is also the issue of unconstitutionality in creating market distortions. They even point out that a possible cap on TEA’s tax credits could cause significant shocks and ultimately backfire. For its part, the Ministry of Labor explains that the development of such an important institution should be based on principles, rules, bonds of trust and high-quality services for the insured, and talk about the “rationalization” of their taxation.

More than 40% return for those who have been working for more than ten years

Today, 30 professional insurance funds operate in Greece to provide additional pension benefits to 192,032 workers, which corresponds to 4.07% of the economically active population or 4.63% of the employed. Their total assets, according to the data for 2021, reach 1.834 billion euros compared to 1.643 billion euros at the end of 2020, an increase of 11.69%. Of course, it does not even reach 1% of GDP. However, even now, despite delays in the necessary “retouching” of an institution that, despite being born 20 years ago, remains in its infancy, at least 5 more TEAs are one step ahead of the opening of operations, including the Medical Association of Athens, the Panhellenic pharmaceutical association, insurance intermediaries, Alpha Bank, Stoiximan, etc.
Assets reached EUR 1.799 billion in March 2022 due to market corrections with high volatility and strong economic uncertainty, according to the Bank of England. Data for TEA without the participation of 4 compulsory insurance companies shows that in the first half of 2022 their assets amounted to about 212.78 million euros, which is a total of 55,032 insured members. The average annual weighted return of the Greek TEA portfolio in 2021 reached 6.14%. The yield is significantly higher than the average interest rates prevailing in the money markets, highlighting the benefits of long-term, regular and sufficiently diversified investments through the use of high-quality professional management. According to the most available data, as of June 2022, their average portfolio return was -7.8%.

TEAs with more than 10 years of experience recorded, from the start of their operation until June 30, 2022, an average total return of 42.09%. In fact, according to the IOBE Occupational Insurance study, strengthening the 2nd pillar would have many benefits: it would help manage and share demographic risk, prevent undeclared work, spread risk more widely, while at the same time strengthening the Greek economy in the long run. society and economy.